Welcome to Glaston Corporation's 2024 Q4 and full year financial reports session. The markets are soft, but Glaston continued steady development in comparable EBITDA. My name is Pia Posio, and I'm your Investor Relations contact at Glaston. Together with me, we have CEO Toni Laaksonen and CFO Päivi Lindqvist, who are going to share with you the highlights, market review, financial developments, and of course, we have a look at the outlook for 2025. Please share your questions during the session in the chat, and we have reserved time to go through those towards the end of our webcast. With this, I would like to welcome Toni Laaksonen to guide us through the Q4 and full year highlights.
Thank you, Pia, and welcome also on my behalf to the Q4 results review. As Pia mentioned, the markets were pretty soft still in Q4, and especially the architectural glass markets remained slow. On the other hand, the bright spot in the market was China on the mobility side, which developed well from our perspective. Our overall order intake was down by 8% in both segments, so the group result was year-on-year down. All in all, we were doing great compared to Q3, so our positive development on a quarterly basis continued, and the order intake grew on Q4 compared to Q3, so that was positive. On the net sales side, the result was pretty good, I would say, even though we were down compared to last year and year-on-year.
On the comparable EBITDA side, we were almost at the same level compared to the comparison period, and the result was 7.5% compared to last year, which was 7.6%. On the other hand, what we were doing heavily during Q4 was that we were accelerating our strategy execution and profitability improvement programs through the new organization. The implementation continued, and we got the new organization ready by the end of the year, and now we are functional with the new organizational model. On top of this, the board of directors is now proposing to the AGM a reverse share split and a capital repayment plan, which is EUR 0.055 per current share. A few words about the full year highlights. The architectural market overall remained soft throughout the year, as we discussed.
Also, the Q4 was low, so the same development we were seeing throughout the year. Then, on the mobility market side, the pre-processing equipment business was developing very favorably, especially in China. On the other hand, the other markets like the U.S. and Europe were also down in the mobility market side. This was then reflected into our order intake, which was down compared to 2023. On the net sales side, we were almost at the same level compared to 2023, so the overall result was a bit below EUR 280 million, which was a pretty good result in this market situation. On the comparable EBITDA side, we had slight improvement, which was a very positive sign compared to the market conditions, and that was really a good performance from our perspective throughout the organization.
The pre-processing production transfer, which was started during the summertime last year, continued, and it was proceeding well throughout the year. We are in full speed with the implementation phase and proceeding according to the plan. Our strategy was slightly updated as part of the organizational renewal, and slight updates were done related to our main KPIs. Of course, also I had the pleasure to join Glaston in August and now have been experiencing the glass industry for a while and enjoying the business. A few words about the operating environment. As mentioned during the previous slides, the market has been very soft. All in all, on the architectural side, the only green spot on the map has been Asia-Pacific, where we have been seeing some positive development, but the other areas have been relatively soft throughout the year.
The mobility and solar side has been developing very well, especially with the pre-processing orders in China, but then, as mentioned, the other markets have been down or soft throughout the year. On the services side, the bright spot has been the Americas market, where we have been seeing positive development in Q4, but also throughout the year, and that has been also giving a certain boost to us on the services side. China, Asia-Pacific, were pretty slow, and some negative progress in Europe also related to the architectural services side. About the long-term targets, comparable EBITDA is one of our key targets strategically, and with that one, we had good progress in 2024, so slight improvement compared to 2023, so 0.2% improvement, which is in line with our strategic targets and a good result compared to the market environment.
On top of this, we have a solid plan how to then go forward with our profitability improvement, and the target remains at the 10% level in the long run. Through the reorganization and pre-production transfer to China, we are seeking for more sourcing benefits, operational efficiency, as we are decreasing our footprint globally. Of course, we are boosting our services through the customer intimacy, and through that, we target to have higher service share in the future. Of course, we are investing in research and development to boost our innovation. With these actions, we, of course, want to tackle cost inflation and then pricing pressure, which we are seeing in certain markets. Around the other targets, we saw mixed development, I would say.
From the growth point of view, as the overall market was pretty slow, we saw the same development in our top line figures, and that -1% decline was visible on our side. On the other hand, we see that the market overall decreased slightly last year. In that sense, we are pretty much in line with the market development. EBITDA was a positive figure from our perspective. Another very bright spot in our strategy was that our employee engagement reached the highest level in the last few years. That was a very good result from the whole organization and shows that we have very committed employees throughout our organization globally. The biggest negative thing in our figures is definitely the health and safety side, where we have a 5.7 LTI figure, which is not in line with our expectations.
We saw some positive improvement related to health and safety, but the room for improvement is still big, and we are developing actions and developing our practices continuously to make our company safer in the future and to secure that we see less LTIs in coming years. On the other hand, we have emissions reduction targets, which we have defined and developed, and we have been developing those so that they are more and more accurate, and the figures are in that sense very well aligned with our plans. The measurement accuracy has been increasing now this year through our work, which is then also visible there when we check the scope one and two emissions. There we saw some slight increase due to the measurement accuracy changes.
Also, the scope three emissions we are capable of measuring, and that was good development by the organization that we did hard work to secure that we have these measurements in place globally throughout our network. A few words about the strategy execution and what's happening. As said, we are focusing on the customer interface and trying to enhance our customer experience through the market area organization, which we introduced last year and which is now operational starting from January. We continue to invest in services so that we have more and more customer focus in the market areas, and we are capable of supporting the customers in a timely manner and fast in case they need our help.
A big part of the strategy is the pre-processing production transfer, which is proceeding, and through that, we aim to gain significant production efficiency savings and also sourcing savings globally. The target is that we will be ready by this summer, and we are still proceeding according to the original plan. On the other hand, on the new business function side, the new solutions and operations function is now operational, and we have implemented the new way of working, which means that all the factories are now under one umbrella, which should provide us clear savings in the future when we can then harmonize our supply chains and sourcing for all of the factories.
On the other hand, the service supply and development organization is also proceeding, and we are still seeking for the new leader, and hopefully we'll have some news about that in coming months to finalize the service supply and organization to get it fully implemented. One important topic for us is still, of course, the technology leadership, and that position we want to keep now and in the future, and therefore we are really committed to invest significantly in our R&D projects to secure that we can develop together with our partners innovative technologies to keep us as the leader in the marketplace. A few additional words on the sustainability side. The strategic targets we have in place, the measurements are there, and we are getting more and more accurate with our measurement practices.
Some other highlights from the sustainability side are that we were capable of finalizing the double materiality assessment, so that was done during the springtime. We are ready with that one. We also got an award during last year, which was this EcoVadis bronze medal, and good results from the company point of view as we were really high in the rankings. On top of that, in December, we were defining and approving the diversity equity inclusion roadmap, which is now ready, and we start proceeding accordingly. We also have the EU taxonomy in use in our business, and we are continuously now measuring how much share of our net sales is coming from the, let's say, taxonomy-aligned targets and activities. We are closing to the 50% share in those ones, especially due to our insulating glass technologies and related services.
All right, and now I hand over to Päivi to go through the financial development.
Thank you, Toni. Yes, let's start the figure part of this session by looking at the new orders and order intake. Like said, the order intake declined 8% in the quarter and was EUR 53 million. This was against a rather high comparison figure, especially in the mobility display and solar segment. Architecture continued to suffer from the soft market. If we look at the product areas and the full year 2024 figures, we can see that the architectural machine product areas both declined quite strongly. We had this kind of decline also in 2023 for the tempering and laminating technologies, but insulating glass technologies then was last year then also kind of hit by the softer market.
In insulating glass technologies, the last quarter orders were flat compared to previous years, so actually the order intake was quite good level. In mobility display and solar technologies, the full year development was flat. Q4, like said, in the machine area was lower than previous year because of the strong comparison. Services as a whole continued to increase in order intake. It was 4% both in full year and the final quarter. If we move to net sales, which was 5% down in the final quarter, this came from two different product areas, the mobility technologies and then also tempering technologies. Also there, I would say that the final quarter of last year was rather strong. For that reason, maybe not that kind of low net sales for a quarter, quite kind of a good level, but lower definitely compared to the previous year.
If we look at the product areas, tempering and laminating went down in full year, and also in the final quarter was lower than the previous year. Insulating glass technologies have had steady growth in net sales throughout the year, also in the final quarter, supported by the good order backlog that this business has enjoyed for quite a while. Mobility display and solar technologies had strong full year net sales growth, even though the last quarter was not that strong. The first three quarters were very good in terms of growth. Services, 3% growth in full year. That was net sales. If we go to the regions, the regional split did change a bit in 2024. The EMEA share declined to some extent because of the difficult markets. EMEA has really been the region where we see most of this architectural decline.
Americas also for full year had negative net sales development, but fourth quarter it returned to growth. We had 7% growth in Americas in Q4 and rather stable share of net sales. APAC is really the region where the growth has taken place. The growth was very strong in the first three quarters. In the final quarter, a little bit kind of still growing nicely, but a bit slower as we start to see some impact from the comparison figures already in Q4. China's share of net sales in the full year increased from 8%- 18%, and China's share of order intake in 2024 was 22%. Let's move forward to profitability. Comparable EBITDA was EUR 4.2 million, 7% lower than the Q4 2023, and margin of 7.5%, rather close to the margin that we had had previous year.
There in Q4 we have negative impact from volume, obviously, but then the services share especially contributed positively. In the full year, we also have a slight increase in the comparable EBITDA margin to 7% from 6.8% in 2023. This improvement is mainly coming from the machine margin improvement. If we move to the reporting segments, let's start with architecture. This is clearly our bigger segment, and the Q4 order intake went down by 10% in the quarter. Insulating glass, like said earlier, good level, flat year on year, and it's really the tempering and laminating area where the decline came from. Services orders were at the same level as previous period. Especially in the U.S., we had a very nice demand for upgrades at the end of the year.
Net sales for the quarter was flat, and quite big differences here between the different business lines. Insulating glass and services were increasing, and then tempering and laminating technologies were declining. Profitability, 8.7% comparable EBITDA margin, good level, but somewhat lower than we had in 2023 when it was, I would say, an excellent level. The reason why the architecture margins were a bit lower now was mainly the machine margins, which were, I would say, having some impact from this kind of softer market. Of course, the margin development is reflecting the competitive situation and the market environment, but that happens with the delay then when those orders that we take will start to show in the revenue recognition.
If we go forward to mobility display and solar, the orders we have now discussed quite a bit, so they were down in final quarter year on year against strong comparison. Services orders developed nicely, up 5%. The net sales was on the weak side, definitely, in this quarter compared to the earlier three quarters of the year. This is partly because of timing in the pre-processing. There we had a very strong Q3, and that had some impact on the Q4 revenue recognition. Another reason is the low order intake that we had the whole year in the MDS heat treatment area. If we go to profitability, of course, it is definitely not satisfactory. We did have some small improvement in the profitability. In the quarter, very close to break even.
If we look at the comparable EBITDA and 1.4% margin, the previous year quarter was close to this, but slightly on the loss-making side. Obviously, the low volume impacted the profit, but it was supported by a higher share of services and also lower fixed costs. The reason we had lower fixed costs was because we are going forward with this production transfer of the pre-processing equipment. We already had some fixed cost improvement in Switzerland. This is creating restructuring costs. In 2024, we had roughly EUR 2 million of restructuring costs related to the transfer, and the expectation of roughly EUR 6 million in total still holds. There will be more costs coming from this exercise also this year. If we look at the cash flow, final quarter was EUR 3.5 million on the positive side.
Full year was a small number, EUR 1.5 million on the positive side, and obviously, clearly a lower operating cash flow than we had in 2023. Working capital consumed roughly EUR 11 million of cash last year, and that is mainly reflecting the lower order intake. The advance payments then move very dynamically depending on the new orders that we receive. Gearing 30% at the end of the year, so clearly higher than we had end of 2023. That was cash. A couple of words about the profit distribution and then the board's proposal to the AGM on executing reverse share split is planned to be done before the profit distribution. The board is now proposing that kind of two shares would be merged into one share, meaning that the number of shares would be halved after this exercise.
More details of this will be following when we publish the annual general meeting notice. If we look at the profit distribution, the comparable earnings per share was EUR 0.09 compared to EUR 0.10 in 2023. The board's proposal is to make a capital return of EUR 0.055 based on this profit. After the reverse share split, this would mean EUR 0.11 with the new share count. This was my part, and now I invite Toni back to discuss the outlook.
Thank you, Päivi. A few words on the 2025 outlook. As we have been discussing today, the market conditions are pretty soft, and therefore it impacts, of course, on our outlook. How we see the situation is that on the net sales side, we estimate that the current net sales level will remain compared to last year.
We will be staying at the same level. We have several profitability improvement actions ongoing, and therefore we are forecasting that on the EBITDA side, we will stay at the same level or improve this year slightly compared to 2024. That is the current outlook compared to the market situation. Now it is time for the questions. Yes.
Thank you, Toni. Thank you, Päivi. We have a good amount of questions already with us, and to the audience, there is still time to share something that you have in your mind to be clarified. Let's start with the MDS side. Do you think the currently solid order intake level is sustainable moving forward as we relate it to the outlook and things moving forward? You note the high short-term volatility in the segment. Does this indicate soft coming quarters?
Yeah, on the mobility side, the volatility is coming mainly from China. There we have a few larger companies who are our main customers, and normally they are placing bigger orders at once, which is then causing certain volatility in our order intake. On the other hand, the underlying service development is pretty solid on the mobility side globally. There we see positive development and upgrade opportunities also outside of China. That baseline development with services is not that volatile. It's actually pretty stable from our perspective. With the Chinese machine orders, we are seeing certain volatility.
Let's stay in China for a moment. Can you elaborate how has the transfer of pre-processing equipment production from Switzerland to China developed in addition to something you already shared with us?
Basically, we announced the plan last summer that how we will implement the transfer and complete it. Everything has been proceeding according to the plan. In that sense, positive development. We have not been seeing any negative surprises. Like mentioned previously in the presentation, we should be very well ready by next summer with the transfer activities. That will, of course, then help us with the fixed cost side.
On architecture side, lower machine margins affect profitability negatively. Could you elaborate what were the main reasons behind this and how has the order book margin profile developed? Maybe. Should I take it? Maybe I'll take this one.
Yes. In Q4, we started to see some impact from the machine margins being lower, whereas the most part of the first three quarters, we had a kind of stronger margin performance.
I kind of took this up briefly in the presentation. It is mainly coming from the tempering side where the markets have been softer longer, and also the order intake has not been as steady and stable as it has been more on the insulating glass side. There we do see some kind of decline in the backlog margin. It means that when those projects are coming to revenue recognition, the margin is lower than it was a year before. Of course, the question is how much can we then compensate this margin development in the backlog by different actions that also Toni explained when going through the strategy.
On that note, could you elaborate a little bit more to the audience? The margin drivers in 2025 in terms of pricing versus the costs?
Yeah, of course, on the pricing side, there is pressure coming from the marketplace. As we described, the markets are pretty soft. Usually that then impacts on the prices in general in a negative manner. On the other hand, we have been initiating several actions on the cost side, which then help us to improve our cost base, both with our margin and also with the fixed costs. Certain sourcing activities through the transfer of production, which then naturally will transfer our supply chain towards Asia. That will definitely help us. On the other hand, we are focusing on three factories, which then means that the factory efficiencies should go up as we only have three factories when moving forward after the summertime. That should increase the productivity and then impact on the unit costs.
Thank you.
There's a question actually related to factory utilization. Is there something that you can say about the current situation in addition to what you just shared with us?
Yeah, as described during the previous answer, that the production efficiencies, we are seeing that they should be going up when we get all the production transferred by the summertime. At that point, as we are only in three factories, it means that we can level load the factories in a better manner than last year.
Thank you. Still related to profitability, how do you expect the phasing with potential margin improvement 2025? Will the most EBITDA improvement come in the second half of the year? A little leading question.
Yeah, of course, when the production transfer has been completed, then after that, we should be seeing more impacts on our profitability side.
At that point, we do not see any restructuring costs, which we will still have during the first half of the year. On the other hand, at that point, all the fixed costs related to the Swiss operations, which we are planning to take down, are then taken down, and we have the cost base at the targeted level. Naturally, that will lead to a situation that the second half of the year should be better for us.
Yeah, I would agree that it is always good to remember that the different actions that are initiated, it takes some time before they really show in the P&L. For that reason, the impact is not happening immediately, but it will take some time.
Yes.
May you explain in a little bit more detail the bridge from EBIT to EBITDA of EUR 15.3 million and how the bridge looks like in 2025?
Yeah, if we think of now reported EBIT and then comparable EBITDA, so there are two items between those two. One is items impacting comparability, and we had a lot of them, definitely. Last year, we started this transfer of the pre-processing from Switzerland to China. We also had some other restructuring costs. We announced the reorganization after the summertime. Also, we have costs from a bigger kind of patent case in the U.S. where we have kind of sued our competitor for patent infringement. Those are the main reasons for the items affecting comparability. Out of these, at least this kind of Swiss transfer to China is continuing. The costs last year were roughly EUR 2 million.
The total expected roughly EUR 6 million. There will be more costs coming from that. The other part between these two is amortization, and that is mainly coming from capitalized R&D. In 2021, we launched a strategy which was a lot about investing more in product development and new products. Now we have started to see the amortizations of those capitalizations hitting the P&L. For that reason, the amortization also increased last year compared to 2023. There will be some increase also in 2025 as those kind of capitalized projects then enter to a phase where the amortization starts.
Thank you. Päivi, I think you may continue with a couple of more. Okay. What do you expect on change of working capital in 2025 as well as the CapEx levels, including the capitalized expenditures?
Working capital, if we start with that, is totally dependent on the order intake. That is dependent on two things, I would say. One is the market situation, whether we will see a recovery this year or not. What is our capability then to capture all other potential opportunities that are there in the market with our new products or our service offering and so forth. For that reason, it is practically impossible to give any indication. I would say it very much depends on the new order intake. CapEx, if you look at the amount of capitalized development that we had last year compared to 2023, it went down quite a bit. I would expect that to be roughly the same level for this year.
There is a very specific number suggested here.
Do you expect your CapEx to sales return to around the 3% level now in 2025?
I think it's better not to answer that question considering what I said about CapEx, because then that would indicate something about the net sales.
Absolutely understood. On that note, related to the outlook, what are the assumptions within the guidance that given the trend in order intakes? Do you expect stronger second half sales and the profitability numbers? Or do you already see better order intakes, which underpins the expectations? What is the sentiment behind the outlook?
Maybe I'll start at least with the order intake. What we are seeing is that, of course, the global market is soft. We believe that the second half might be a bit better, but we are not expecting any major jumps during the year.
Steady development, most likely what we should be seeing and in a similar way as we saw last year. Nothing significant expected as such that there would be bigger jumps in our forecasts. On the other hand, from the profitability point of view, what we are doing is that we need to maintain strict cost control, especially in this type of a situation. Through that, we believe that we have a fair chance to improve our profitability during the year.
Thank you. Let's move with a couple of questions towards the market areas and the customers. Let's start with Europe. What are the biggest headwinds in IMIA currently, and what is the key pushback from bigger clients for the lack of investments, specifically referring to Europe?
In Europe, I would say that the customers are in still the same mode that they are not looking for additional capacity. Not too many companies are seeking out to invest in additional production capacity. Instead of that, they are looking for production efficiency, energy efficiency, and so on. Through this development, we are seeing more and more upgrade orders, more and more service orders, and also individual machine investments, which the customers are implementing in the middle of their production lines to gain more cost efficiency, for instance, or productivity in their current facilities. They are not ramping up new facilities. For instance, this upgrade development, positive development on that side was visible last year in our figures, and our upgrade sales increased. That would be the overall market outlook, both for architecture and mobility in Europe.
Thank you.
Expanding to global level, is there something in addition to operating environment sentiment that we discussed earlier that you can elaborate on the market sentiment per market area? Or on the other hand, what are the customer segments and what is the behavior in each of the market areas?
In that respect, the development is pretty similar as in Europe. Also in North America, in Asia, we are seeing similar development that not so high investments or even moderate investments in new capacity, but many customers are looking for improvements with their existing production facilities. The only major difference compared to this trend has been China with the mobility segment. There we have been seeing these pre-processing orders and, like said previously, some fluctuation with those, but still the trend is positive over there and we still see that that demand continues.
Thank you.
Something that I interpret is outside our reach of impact, but a couple of questions. Would the end of the war in Ukraine help you, so especially on the architecture side?
I would say that it could create demand for certain countries. Like for instance, we have certain customers in Poland. Most likely they could gain some new business out of this situation because, of course, a lot of construction work needs to happen in Ukraine, hopefully when the war then ends sooner than later. We believe that it would mean investments, especially in the surrounding countries with our existing customer base, but the magnitude of investments, that's difficult to estimate in advance.
Thank you. A very topical question related to tariffs, which are happening, let's say, around the world. One could even speculate. What is the estimate and the impact on Glaston's business?
Should those be in place?
All in all, again, I would say that we are well positioned in that respect. For instance, if we compete against players who have only manufacturing in China, then when they are exporting to countries which might raise up these tariffs, then they do not have any options than to face the tariffs. On the other hand, in our case, we have the flexibility between our factories that we can supply both from Europe and China, which then benefits us in many ways, especially against competitors who are just operating in individual countries. Also, this benefits us if China is implementing certain tariffs and actions against Europe, because then we have local manufacturing in China. With our global network, we should be very well positioned against tariffs.
I would maybe add to this also the fact that, of course, no one is enjoying this uncertainty. It is then something that is kind of adding to this global kind of uncertainty and making customers hesitant to make those investment decisions.
Thank you. It seems like we are running out of questions. At this point, a little reminder about the upcoming financial reports for this year. Early May, early August, and end October, we look forward to seeing and hearing you again. Toni, is there something specific we would like to raise at this point?
Yes, definitely. The next reports will be then provided together with Magnus Jöplum, who will then start as the CFO in March. Päivi is then moving to a new company, to new challenges. I want to thank Päivi for her great career with Glaston.
She has been with us for many years and has been involved in several major topics in Glaston's history, including the major acquisition what we did a few years ago. All those have been happening successfully. Throughout Päivi's career with Glaston, we have been seeing positive development trend in many ways in our figures and in our organization. Päivi is very well liked throughout the organization, so that I can say. We will be missing her when she's leaving us. I really want to give big thanks to Päivi for her contribution and hope her very successful career with the new employer.
Thank you, Toni. Overwhelming words. Of course, I also want to say to everybody that I'm very thankful for the actually eight and a half years with Glaston. This company is very different from what it was when I started.
That also, I think, makes me proud and hopefully also makes everybody at Glaston proud that it's not an easy industry, but I think we continue to kind of move forward. I think that Glaston is a great company with great people, and I will be following up very closely what is happening. Thanks, everybody.
Thank you, Päivi. On behalf of the people in the stream, I trust that they share their greetings with you as well. With this, I want to thank Päivi. I want to thank Toni and thank everybody for joining us and listening and sharing very, very good questions, like always. Thank you and happy Valentine's Day.